Sunday, March 15, 2009

Isn’t it a bit perplexing, Dear Gentle Reader(s), to read the story following the headline in today’s The New York Times? After all, “A.I.G. Planning Huge Bonuses After $170 Billion Bailout” isn’t exactly what one would expect for a lede in these dire financial times.

Yet, there it is in all the spectacular tone deafness of one Edward M. Liddy, appointed by the government to run the company.

For wonderment try this for the wrong word:

Liddy wrote, “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”

What, one ponders, might constitute “the best and the brightest talent.” What makes the bonuses even more problematic is this paragraph:

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

In other words, DGR(s), the “best and brightest” which Liddy wishes to reward and retain are those who got us into this mess in the first place.

Then, too, there was a negotiation which resulted in some of these bonuses being paid, and that negotiation cripples the effort to reduce, much less withdraw, the bonuses.

It’s almost as though the best and brightest are the lawyers who did the negotiations for the alleged best and brightest of A.I.G.’s financial products division.

Contracted bonuses which have to be given to people who made the wrong decision.